Category Archives: primary risk

by Philip Boxer BSc MBA PhD
A recent examination of the Leadership Qualities Framework, developed by the UK’s National Skills Academy, shows just how difficult it is to counteract the bias of North-South dominant assumptions about governance and leadership[1], even as in this case where there is very clearly a wish to do so.[2] This bias becomes apparent in the assumptions made about the nature of strategy and its relation to hierarchy.

Policy, Strategy and Tactics
The framework gives a special role to strategic leadership with its own additional qualities: creating the vision and delivering the strategy. In the forward to this framework, Norman Lamb MP points out the following:

Good social care has the potential to transform people’s lives. It can help them realise independence, exercise meaningful choice and control over the care and support they receive, and live with dignity and opportunity. Good social care has the potential to transform people’s lives. It can help them realise independence, exercise meaningful choice and control over the care and support they receive, and live with dignity and opportunity. High quality leadership, embedded throughout the social care workforce, is fundamental to the delivery of high quality care. At the same time, we need to reach beyond the workforce and bring leadership skills and capabilities to service users, their carers and the communities in which they live and work.

For leadership to fulfill this promise, it must at least aspire to responding to people’s lives one-by-one. Put another way, in order to transform a person’s life, a particular combination of services need to be dynamically aligned to that person’s needs over time that remain particular to that person’s situation and context. This alignment of services has to be run East-West to reflect the fact that its design is inevitably entangled with the way they impact on that person’s experience.
This means that leadership has to enable the organisation to hold a dilemma – a tension between securing economies of scale and scope from the way component services are provided, and securing economies of alignment from the way these component services are combined in relation to any one person’s needs. This tension can be represented by the concept of rings and wedges: rings (securing economies of scale and scope) can provide well-defined services that are effectively provided by North-South dominant forms of governance, while wedges (securing economies of alignment) align combinations of services in particular ways that can be effectively provided by East-West dominant forms of governance.
So what is wrong with thinking in terms of strategy-and-tactics? The industrial world names as ‘strategy’ what the military calls ‘operations’, while the industrial world names as ‘policy’ what the military calls ‘strategy’.[3] Relating the industrial names to the NSEW model<sup[4],

tactics are about using know-how(W) to make the best possible use of capabilities(S),

strategy is about developing the most effective know-how(W) for addressing a particular kind of demand(E), and

policy is about determining what variety of demands(E) can be addressed within the context of the organisation as a whole(N).

The point about East-West alignment is therefore that strategy has to be determined at the level of the individual wedge and it is the policy frame that creates the conditions at the level of the organisation as a whole within which the ring-wedge dilemmas can be supported effectively. Strategy has to be held at the edge of the organisation within a unifying policy frame.

The vertical and the horizontal axes of governance
Which brings us to the relation of strategy and hierarchy. The Leadership Qualities Framework proposes that it be applied at four levels of leadership as follows:

Strategic Leadership – Senior leaders, Directors and Managers who are responsible for directing and controlling the organisation

The issue here is that these levels are defined hierarchically (in the sense that each one is accountable to the level above it), as opposed to being defined in terms of the tensions held between them, which look different in terms of rings and wedges:

Operational Leadership becomes responsible for supply-side leadership of defined services, accountable for the way these services can deliver outcomes in combination with other services[5];

Front-Line Leadership becomes responsible for demand-side leadership at the edge of the organisation, accountable for the dynamic alignment of combinations of services appropriate to the situation and context of a demand[6];

Front-line workers become responsible for task leadership, ensuring that a particular alignment of services is delivered effectively; and

Strategic leadership becomes responsible for asymmetric leadership – leadership which enables the organisation to hold and sustain a dynamic balance between its supply-side and demand-side.[7]

Asymmetric leadership is about enabling dilemmas to be held effectively E-W
The use of hierarchy has to be placed in the context of networked forms of organisation and distributed or collaborative approaches to leadership.[8] Operating within these turbulent complex ecosystems cannot be managed independently of the dynamics in the environment. In the place of hierarchy with its defined outputs as an overarching organising principle therefore comes the containing of dilemmas and a double challenge.[9]

Notes
[1] The difference between North-South and East-West dominant assumptions about governance is introduced here, with comment on the consequences of North-South dominance on the East-West axis here.
[2] A close reading of the detailed content of the framework clearly recognises the issues raised in this blog. The difficulty is that the conceptual scaffolding within which the framework is constructed rests on presumptions of hierarchy. For more on conceptual scaffolding, see Lane, D. A., R. Emilia, et al. (2005). “Ontological uncertainty and innovation.” Journal of Evolutionary Economics 15.
[3] For more on this three-way distinction, see creating value in ecosystems: establishing a 3-level approach to strategy.
[4] Another way of understanding the relations between policy-strategy-tactics is in terms of the dual span of complexity and associated timespan of discretion, complexity and timespan being synchronic and diachronic ways of describing a system. In these terms the actors within a system are subjected to (i.e. constrained in their choices by) structure; and narrative takes place within the context of actors’ lives. Policy is thus structural in its effects, strategy is about asserting and sustaining difference between actors, and tactics are the unfolding of narrative within this context. A forensic process therefore examines the implicit effects of structure on narrative in order to identify how its constraints ‘kill’ certain kinds of narrative i.e. prevent certain kinds of outcome.
Jaques’ insistence on discrete levels of discretion can be understood in these terms as relations of subjection. The figure above is derived from Figure 5 in Christian Dominique and Stephane Flamant, “Strategic Narrative: around a narrative intervention assisted” French Management Review, 2005/6 No. 159, p. 283-302.
[5] This is referred to as the primary task of the service…
[6] … while this is referred to as the primary risk faced by the particular relation to demand. See quality as the driver at the edge for more about these two axes.
[7] This creates challenges for the organisation, both enabling its client-customers to be related to one-by-one by authorising leadership at the edge, and also by creating appropriately agile supporting platforms and infrastructures that make this sustainable. This kind of complex organisation I refer to as quantum organisation.
[8] For more on the architectural implications of quantum organisation, see architectures that integrate differentiated behaviors
[9] For more on the different nature of complex environments, see the drivers of organisational scope.

The horizontal line represents the way primary task is defined, and the vertical line represents the way primary risk is defined.3 This gives us a way of distinguishing 4 types of Quality, each one built on the foundations of the one before:

Type I – the behaviour conforms to its contractual specification e.g. we delivered it in the time window we said we would.

Type II – the behaviour serves the supplier’s purpose in what it delivers e.g. we delivered it in a time window that fitted the urgency you were prepared to pay for.

Type III – the behaviour serves the user’s purpose in how it is delivered e.g. we installed it and ensured it was working as you expected within your environment.

Type IV – the behaviour continues to serve the user’s purpose over time through being adapted to the user’s changing needs e.g. we monitored its performance and modified what it was doing as your needs changed.

Using the rcKP language, the behaviours on the left are r-type and c-type, being at best customizable in ways that serve the supplier’s purpose. In contrast, the behaviours on the right are K-type and P-type, being concerned with aligning performance to the current and/or evolving nature of the user’s situation. Quality on the left can be defined largely independently of the context-of-use, while quality on the right cannot.

Notes
[1] A distinction can usefully be made between consumer, customer and client that speaks of increasing involvement with an active user’s context-of-use.
[2] The point being the lower the strategy ceiling, the fewer of the quadrants are judged to be relevant to quality, arms-length contracting restricting quality to the type I fulfillment of a contract to deliver.
[3] These definitions are implicit in the behaviour of an enterprise within the context of its domain of relevance, and reflect the way its managers’ identities are supported by those behaviours.

The UK Government is proposing to remove the superstructure of Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) and delegate authority to the General Practitioners (GPs) at the edges of the health care system. How will GPs manage? How will they be held accountable? And how will they balance what is collectively affordable by the nation with the good of the individual patient? It will be some time before there will be answers to these questions, but I propose that the issues can be usefully framed in terms of how GPs manage primary risk.

Primary risk and the value deficit
The traditional use of ‘primary task‘ is in terms of the primary task of the organization. For example, the primary task of the PCT is to provide healthcare for its patients. The funding for the PCT is determined by a formula related to the characteristics of the people within its defined territory. The healthcare needs of its patients are determined by the GPs caring for those patients. The primary task is realized through the way the PCT organizes and holds accountable the services it provides to its patients.

In practice, there is always a gap between the services available to treat the patient and the patient’s particular needs – what we shall call a value deficit, the value being the value to the patient of the services provided. ‘Value’ here is the way the patient values the services provides, which may or may not be expressible in monetary terms. Value in these terms is therefore to be distinguished from the costs of the services provided.

A recent study by McKinsey’s of the costs of chronic healthcare in Germany showed over 80% of costs arose from patients with conditions that were chronic: GPs were having to manage services through the life of the patient’s condition, with the ways in which this through-life management was provided having a significant impact on the through-lifecosts of the patient’s condition.

The organization’s perspective on primary task therefore becomes insufficient to address the variation at its edges arising from GPs varying through-life management of their patients’ conditions. The organization also has to find ways of managing primary risk: the risk that for any given patient’s condition, the value deficit will be unacceptably large.

The need for organizations that can support East-West dominance
Those of you familiar with the principles of asymmetric design will recognize the need for East-West dominance in the design of an organization capable of managing primary risk, since the average proscriptions of North-South dominance only hold the doctor accountable for aggregate measures of performance. East-West dominance becomes necessary if the through-life costs of treating patients’ conditions are to be managed across such variation, as evidenced by the performance of Kaiser Permanante.

So getting rid of the SHAs and PCTs may make sense if they have been judged to be unavoidably North-South dominant. But we still need to consider how the commissioning processes of GPs are to support East-West dominance. This was something that we began to consider in the Orthotic Pathfinder Projects, and in the platforms needed to support them.

In managing primary risk, doctors are familiar with the need to avoid errors of execution (treatment applied wrongly) and errors of planning (wrong combination of treatments) with respect to their patients’ conditions. But holding doctors accountable within East-West dominant forms of organization also means enabling them to avoid errors of intention (treating wrong condition).[1]

The systematic under-use of treatments found in the Orthotics Pathfinders was not because the doctors didn’t understand what the patients needed. It was because the North-South dominant systems of accountability under which they worked had perverse incentives built into them that made it impossible to provide through-life treatment of their patients’ conditions, other than at personal cost to themselves.

I guess what is unacceptable at the level of the individual cannot be assumed to be addressed by adopting the same approach at the level of the government of averages. I guess the present UK government assumed this when they abolished the SHAs and PCTs, but they nevertheless appear to have replicated the same difficulty for practice-based commissioning: East-West dominant forms of governance really are different to North-South dominance forms of governance!
Notes
[1] For more on the different nature of errors of intention, see ‘Unintentional’ errors and uncosncious valencies.